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Jefferies sets $46 target on Nextracker, sees balanced risk/reward

Published 03/09/2024, 22:14

NXT
-2.39%

On Tuesday, Jefferies initiated coverage on Nextracker Inc (NASDAQ:NXT), a provider of solar tracking solutions, with a Hold rating and a price target of $46.00, suggesting around a 13% potential upside. The firm noted that Nextracker has outperformed the TAN, a clean energy ETF, by 900 basis points year-to-date.

This performance is attributed to the company's consistent track record of exceeding expectations and raising forecasts.

Nextracker's success comes as a standout within the clean technology sector, which has faced various challenges. Despite the company's positive performance, the analyst pointed out several factors that contribute to a balanced risk/reward scenario for the stock. These include the sector's broader headwinds, a recent change in the company's Chief Financial Officer, and the possibility of project delays.

The company's ability to consistently beat market expectations and adjust its forecasts upward has distinguished it in a field where such achievements have been rare. Nextracker's performance has been particularly notable given the competitive and often volatile clean tech landscape.

Jefferies' price target reflects a cautious optimism, acknowledging Nextracker's solid performance to date but also considering the potential difficulties that lie ahead. The analyst expects that the company may face more challenging comparisons in the future, which could impact its ability to sustain its current growth trajectory.

Investors are advised to monitor Nextracker's progress closely, especially in light of the recent executive changes and the potential for project delays that may affect the company's financial outcomes. The Hold rating indicates that while there may be upside potential, there are also factors that could limit the stock's appreciation.

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In other recent news, Nextracker Inc. has reported a significant 50% year-over-year revenue growth in the first quarter of 2025, setting a record for adjusted EBITDA during the same period. This financial milestone follows the company's strategic acquisitions of Ojjo and Solar Pile International, which aim to expand its geotechnical capabilities.

In addition, Nextracker has committed to enhancing domestic manufacturing in the U.S., with plans to deliver a product made entirely of domestic content early in 2025.

Roth/MKM maintains a positive outlook on Nextracker, attributing its performance to potential market share gains and the strong experience of its management team.

The firm retains its Buy rating and a $65.00 price target for Nextracker's shares, citing the company's ability to navigate industry challenges effectively and the recent appointment of a CFO focused on return on capital, margins, and cash flow.

In other company developments, Nextracker's shareholders have approved executive compensation and an equity incentive plan, which increases the number of shares authorized for issuance under the plan by 11,100,000.

Julie Blunden, Steven Mandel, and Willy Shih have been elected Class II directors, and the appointment of Deloitte & Touche LLP as Nextracker's independent registered public accounting firm for the fiscal year ending March 31, 2025, has been ratified. These recent developments underscore the company's robust strategy and growth potential.

InvestingPro Insights

As Nextracker Inc (NASDAQ:NXT) garners attention with its solid performance and a Hold rating from Jefferies, it's insightful to consider additional perspectives from InvestingPro. With a market capitalization of $5.91 billion and a P/E ratio of 10.77, the company stands as a significant player in the clean technology sector. Notably, the company's revenue has shown impressive growth over the last twelve months as of Q1 2023, with a 38.5% increase, reflecting its strong market position and operational success.

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An important InvestingPro Tip to consider is that Nextracker holds more cash than debt on its balance sheet, which is an indicator of financial stability and may provide a buffer against market volatility. Furthermore, the company's liquid assets exceed its short-term obligations, suggesting a healthy liquidity position that could support sustained operations and growth initiatives.

Despite the recent price decline, with a 25.07% drop over the last three months, analysts predict that Nextracker will be profitable this year, which may offer reassurance to investors concerned about the stock's recent performance. Additionally, the company's cash flows can sufficiently cover interest payments, a testament to its financial robustness.

For investors looking for a deeper dive into Nextracker's financial health and future prospects, InvestingPro provides a wealth of additional tips – there are 9 more tips available that can offer further guidance. With the next earnings date on October 23, 2024, investors have critical information to anticipate and strategize around Nextracker's upcoming financial disclosures.

While the recent executive changes and potential for project delays present uncertainties, InvestingPro's insights and tips, such as the company's strong liquidity and anticipated profitability, may help investors make more informed decisions. For those interested in exploring further, additional tips and data can be found on InvestingPro's dedicated page for Nextracker (https://www.investing.com/pro/NXT).

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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